Community Empowerment Matters

                      Many nonprofits host game nights to fundraise. But if you’re not careful, you might have to pay  taxes on this fundraising if the IRS considers it to be unrelated to your nonprofit’s purpose (called  unrelated business income). In this blog post, first I summarize what is unrelated business income  (UBI) and what happens if you have to recognize it on your taxes. Then, I go through a few ways you  can structure your gaming nights to avoid unrelated business income.   What is unrelated business income? For tax-exempt entities, the IRS wants to make sure that nonprofits cannot use their tax-exempt status to avoid paying taxes on income that is not related to their tax-exempt purpose, this is referred to as UBI. If an activity meets three conditions it could qualify as UBI: [1] The activity must be considered a trade or business; the activity must be regularly carried on; and the activity must not be substantially related to the organizatio

  As an LLC, there are many ways to secure financing to help grow your business. Financing and funding are crucial to scaling and reaching that next level of business potential. Entrepreneurs may not be aware of one powerful tool to security early investment: convertible notes. In this article, we will examine how LLCs can trade equity for investment by issuing convertible notes so that your LLC can thrive. A Key Distinction: Members & Membership Interest There is one key distinction we need to make between equity for LLCs and equity for other types of entities that will serve as a starting point for this conversation and help sharpen your use of convertible notes as a financing tool. The key is this: the people (or entities) who hold equity in an LLC are called “members” and their ownership is called “membership interest.” Unlike other entity types, a C-corporation for example, LLCs do not have “stock” or “shares” owned by “shareholders.” The terms “stock” and “shares” are re

  Can a company generate profit and support social causes? Can a company pay stockholders and commit to improving the environment or supporting childhood education? Yes, and you have likely encountered such companies! Ben & Jerry’s, Allbirds, Cabot, Patagonia, and Eileen Fisher are just a few popular companies that have been certified as organizations committed to improving society. [1] Many organizations utilize one of two options (or both) to signal that they have a socially-minded mission and are acting with the goal of bettering society: benefit corporations and B corps. The two sound very similar and are often confused for that reason. However, benefit corporations and B corps differ in many ways that organizations should consider. Benefit Corporation   A benefit corporation is a relatively new legal entity that has become popular in the past few years. A benefit corporation is a legally recognized entity that is established by filing with the state, just as an organizat

  https://urbjournal.com/wp-content/uploads/2021/03/stock-tracker.jpeg Introduction   It is well established that starting a small business differs greatly from forming a giant corporation. There is less spotlight that falls on the business’s operations after its formation or on its long-term fate. Yet important questions persist during these later stages. How can a small business keep its employees engaged in the business? It’s an especially relevant concern for small businesses, because they can often rely on having a tight-knit group of workers who believe in the company. And what happens to the company when the founder sells up or retires?   Employee Stock Ownership Plans (ESOP) are one option to answer both of those questions. ESOPs distribute shares to the business’s workers, giving them part ownership in the company. And ESOPs can simultaneously set up a succession plan: the company will pass from founder to employers. These benefits, and others, have seen a minor surge in t

  Defined as an urban area in which it is difficult to buy affordable or good-quality fresh food, food deserts are a modern phenomenon of our industrialized and ever urbanizing world. Affecting many urban centers within the United States, the city of Detroit is no exception to the norm. The majority of the food we consume in the US travels hundreds, if not thousands of miles to its final destination [1]. There is however, light at the end of the agronomic tunnel. Following the rapidly expanding trend of eating local, and farm to table sustainable living, in 2012 the City of Detroit legalized urban farming. This not only alleviates some of the economic impacts associated with eating fresh produce, but also has served to bolster and beautify Detroit’s communities.             The 2012 amendment to varying sections of the Detroit Zoning Ordinance established the legal basis for today’s urban agricultural movement [2]. This action by the City Council enabled agriculture within the conf

  Implications of securities laws on cooperatives  Securities laws remain complex, nuanced and vary across state lines and the federal government. Their implications are often difficult to understand and navigate alone, especially as a cooperative. Without an applicable exemption, securities need to be registered with the federal Securities and Exchange Commission (SEC) and/or a state securities agency. Registration requires additional time and funds, which carries a larger administrative burden on your end, a burden that could be detrimental to your co-op as you’re getting it off the ground.  Securities law implications on cooperatives are not always clearly defined, especially at the state level. This is likely due to the fact that several states do not mention shares in a cooperative in their definition of securities. And because securities laws vary across states (and there remains no presiding federal cooperative statute), what might be true regarding treatment of shares in a coop